Sarepta Therapeutics Inc. of Cambridge, developer of a controversial experimental drug for a rare form of muscular dystrophy, said on Thursday that it plans to sell $37.5 million in company stock. The company will use the money to bolster its product development and manufacturing efforts.
The company declined to provide additional details about the transaction.
The share sale comes as Sarepta awaits a crucial decision by the US Food and Drug Administration whether to approve the sale of eteplirsen, a drug designed to treat Duchenne muscular dystrophy. The disease, caused by a protein deficiency, affects about 1 in 3,500 boys, and almost never occurs in girls. Duchenne causes the muscles to atrophy; victims rarely live beyond age 25.
Sarepta tested eteplirsen in 12 boys afflicted with the disease and said 10 showed significant benefits. But FDA scientists criticized the way Sarepta conducted its tests, saying the company still hadn’t proven the efficacy of the drug. In May, an FDA advisory panel recommended against allowing the sale of eteplirsen.
But the FDA could overrule the panel and let eteplirsen onto the market. Earlier this week the agency asked Sarepta to submit more data on its drug, and separately recently issued new guidelines making it easier for patients to get access to experimental drugs not yet approved for sale. It’s possible that Duchenne patients could get eteplirsen under the new guidelines, without having to wait for the FDA to approve the drug.
Chad Messer, a pharmaceutical analyst with Needham & Co. LLC in New York, said Sarepta is short of capital and needed to raise money. “Without this cash they would have run out sometime in the fourth quarter,’’ Messer said. He predicted the extra money will get the company into 2017.
Messer said that while it’s common for pharma companies to raise more operating cash through share sales, they usually wait for good news before tapping the market. “Normally you would like to hit a milestone, watch your stock go up, and then raise money,’’ Messer said. But if the FDA follows the advisory panel’s recommendation and blocks sales of eteplirsen, Sarepta shares will fall in value. So the company is hedging its bet by offering shares before the decision is announced, Messer said.
Sarepta’s share price has surged and waned over the past year. The company’s stock traded at around $42 last October, but since then it’s dipped as low as $11. On Thursday, Sarepta shares rose 8 percent, to $20.99.
Hiawatha Bray can be reached at hiawatha.bray@globe.com. Follow him on Twitter @GlobeTechLab.
